Optimizing the Supply Base for Calibration Services in North America

Calibration services industry is fragmented with many regional players. Sourcing calibration services is one of the areas to achieve cost savings which is becoming the focus areas for the pharmaceutical companies. On the supply side, optimizing the supply base can help companies in achieving cost savings. Though there is no one source for these services, companies are focusing on minimizing the number of service providers to the extent possible. There are three ways to procure calibration services; in-house, outsource to OEMs and/or to third party service providers. The three models are compared on the basis of various parameters such as cost effectiveness, equipment brand coverage, level of consolidation offered, balance between onsite and offsite services, and labs preferring these models to understand the possibility of supply base optimization. The market trend in procuring these services in North America is also analyzed to validate the findings. Third party service providers are found to be a good choice for the end users if their objective is to consolidate the supply base locally and achieve cost savings. TSPs are regionally dominant players while OEMs have global presence. Problem Statement / Introduction There is high pressure on pharmaceutical companies as patents are expiring in the next two years and are seriously considering cost savings as an option to have sustainable profits in the generic market. In addition, governments are also pressurizing companies to reduce the final price to the consumer driving the need for cost savings. In such scenario, companies focus more on maintenance and calibration of current assets instead of investing in new equipment. Procurement of calibration services is one of the areas where organizations can achieve cost savings.